Distance from London holds Back Spread of Fast Food Outlets in UK

Originally Published 08 April 2003

New research by University of Warwick Economics Professor Michael Waterson, to be presented at the Royal Economic Society's Annual Conference on Tuesday 8 April, explores the influences on the spread of fast food outlets for the key case of McDonalds in the UK. It finds unsurprisingly that population and population density influence the spread of their outlets - locations around the UK with greater population and greater population density received outlets first. However distance from their head office in London also mattered. Districts more distant from London than others are likely to get outlets more slowly. As expected the research also found that once the company moves into a particular part of the country, adjoining areas are more likely to have outlets developed there.

Professor Waterson has examined the development of the McDonalds chain from its entry into the UK with a group of outlets in the London area in 1974 until 1991, when Burger King first became a serious competitor.

To illustrate, the first major push outside the immediate environs of London did not come until 1981, when a number of outlets were opened in Birmingham and surrounding towns. It was not until 1985 that the firm reached Yorkshire and 1987 when the first Scottish outlet was opened. Yet Cheltenham had a McDonalds by 1982.

The study's estimates suggest there are powerful underlying patterns at work, whereby profitable locations are chosen first, but they also point to the significant importance of distance and other geographical features in influencing these patterns.

In related work looking at the inter-relationship between McDonalds and Burger King's opening policy between 1991 and 1995, Professor Waterson finds that the presence of one in an area if anything encourages the other to go there.

Thus, unlike some other established businesses, which would like to keep rivals at some distance, and even attempt to prevent nearby entry, the burger market does not appear to suffer much fromovercrowding.